Sep. 16, 2013 - 1 Bond Street loft goes over $1,500/ft for 3 windows

the limits of a (lovely) form

Last week it was the problems caused by the elevator placement in a Manhattan loft with a classic Long-and-Narrow shape (September 13, 77 White Street loft lacks “bedrooms” because elevator is in the wrong place). Today, the recently sold “1,600 sq ft” Manhattan loft #4D at 1 Bond Street (Robbins & Appleton Building) has some wonderful (er … “authentic”) loft elements, including high ceilings, wood columns, some brick, and “over-sized south-facing windows”, but it also has an odd shape, a kinda sorta square with 3 corners cut off, which makes for a rather challenging floor plan. Yes, it is “1,600 sq ft”, but has room for exactly one bedroom because the south wall is shortened on both ends of what would have been the square, so there are only 3 of those over-sized windows. The finishes appear to be high quality, as they are enthusiastically and specifically babbled, well photographed, and helped push the price to $2.415mm ($1,509/ft).

That is one heck of a value for a space so challenged in shape.

It took the market a while to get there, abetted by patient, if not stubborn, (and flush) sellers. The sellers held firm to their price from October 6, 2012 (asking $2.65mm) until negotiating a 9% discount to get to the contract on May 1 that closed on August 20 at that $2.415mm. Obviously, in those 7 months, lofts at all values were flying through The Market, but these folks could (literally) afford to wait; as we’ll see below they had already bought a new loft before putting this one on the market, and were likely waiting for renovation there to be complete before getting serious about selling on Bond Street.

Back to the odd space. Having only 3 windows is only one challenge posed by the shape of loft #4D. Look at the shape of the master suite and the matching listing photo (#5). The cut-away in the southwest corner means that you will never see that window while lying in bed, and with the radiator on that (short) south wall, there is very little use that can be made of that nub.

Of course, you don’t really want to see out of these “over-sized south-facing windows”, as they look south over the narrow Jones Alley at the rear of the neighbors that front on Bleecker Street. (You see only brick out the windows in that bedroom photo; the same would be true if you got a closer look at the pair of living room windows.)

“1,600 sq ft” would be quite a large apartment uptown, or could be a spacious loft, if in a different form. But with this shape and single exposure, loft #4D has one bedroom, one interior office slash guest room, and no place else to put a third sleep area. Don’t think about using the “dining area” nook, as you’d then have to close off the open kitchen, which is the most brag-worthy part of the loft.

But there are several weird things about the kitchen, as marketed. Unless there are multiples, that “built-in wine cellar” is not “in” the kitchen, but is stuck on the end of that long wall of closets along the entry (see pic #4). A small thing, but in that photo the kitchen walls are white, while in the next photo (#5) the closer-up kitchen has green walls. In that photo, it is easier to see how the cabinets are flush to the overhead soffit on the east wall but not on the north wall. Looks awkward to me, the kind of thing I’d expect to see in a loft with a primitive kitchen rather than one that boasts state of the art with high-end materials. It would have been an easy thing, even with standard cabinets to bring that north wall forward a few inches, or to have pushed that soffit back to match the cabinet depth.

Let’s not quibble too much (note to self …) as this fact proves that everything worked out pretty well in the marketing: sold at $2.415mm, $1,509/ft.

Noho to Soho, eventually

I mentioned up top that the #4D sellers were flush. And by “flush” I mean able to buy a $3.175mm loft that needed a significant renovation while carrying the Bond Street loft for 16 months. They bought the “3,200 sq ft” full-floor Manhattan loft on the 7th floor at 307 West Broadway for that $3.175mm on April 23, 2012, 6 months before putting loft #4D on the market.

I hope it does not feel to them that I am stalking them, but I noted that the 7th floor at 307 West Broadway was in contract when I hit the sale of the 6th floor in my April 16, 2012, artist loft clears at $742/ft in south Soho, 307 West Broadway. I described the condition of the 7th floor at that time as coming with a renovation after purchase:

[it] is in move-in condition, with chef’s kitchen, spa-like master bath, “ a unique floor plan that will intrigue”, and (let’s face it) a floor plan with an artist’s loft that will be improved with some non-trivial budget

It seems pretty likely that it took at least from April to October last year for the Noho-sellers-Soho-buyers to be confident that they could put the much smaller Bond Street loft on sale and be able to move into the finished West Broadway loft by the time Bond Street sold. They carried $5.5mm worth of lofts while doing a substantial renovation of at least the back half of a “3,200 sq ft” loft. That’s “flush”.

Here’s a hint as to why they did it (in addition to having enough money to be able to): the new loft has 4 exposures and 21 windows, with open views from many of those windows, including Hudson River views. In Noho, of course, the had 3 windows on a single exposure, with a “view” of bricks.

curiously, not at the beginning of Bond Street, now

One final note for today. I’d love to know why the Robbins & Appleton Building is officially 1 Bond Street (or, 1-5 Bond Street), when it is not at the corner of Broadway. You’d think the corner building would have an alternate address on Broadway and another on Bondt Street, as is typical of corner buildings. I wonder if “Bond Street” originally had a western terminus at Jones Alley, rather than at Broadway. I can’t think of another reason for this atypical building numbering.

With so many Manhattan lofts (and so little time, alas), there are times that Manhattan Loft Guy themes just emerge: one post leads to the selection of another sale for discussion, then another …. (The Shark Week meme I played on last week.) Here’s my third post in a row on the oh so short, oh so chic Bond Street in Noho. But the more interesting aspect of the recent sale of the “1,344 sq ft”* Manhattan penthouse loft (with “1,134 sq ft” private roof top) #6E at 57 Bond Street is that the seller decamped from this newly built (2003) condo loft in Noho to a much larger Tribeca luxury condo loft conversion (2005) with no outdoor space. I don’t know the guy, but it is fascinating move.

The finishes were top of the line for its time (not so long ago), including “Poggenpohl custom cabinetry, ... Sub Zero refrigerator and 60 bottle wine cooler, Bosch dishwasher and Viking range. ... master … bath with Carrera marble and a steam shower. ... fully landscaped and furnished private roof deck”. Access to that roof deck is both by elevator and by interior stair, which is a nice convenience, especially because that interior access is via a (most inconvenient) spiral staircase. (That staircase is artfully omitted from all photos.) That huge roof deck also takes the squeeze out of the interior floor plan, for as many months as one could use it as an additional living room (complete with television and fire urn), though The Miller would say it is proportionately too large to command a top premium.

The guy paid $2.595mm when he bought from the developer in June 2007 and just sold at $3.8mm. Nicely played, sir; nicely played. (At this end.)

Contrary to what you’d see on StreetEasy, the guy did not sell above ask. It’s not StreetEasy’s fault, but someone input incorrect data into the feed that StreetEasy followed. (Let’s stay on the high road and assume it was an accident of an all-too-frequent sort.) Our listing system (it was a Corcoran listing) shows a contract date of April 26, sadly earlier than the “price drop” that StreetEasy carries. Alas.

… to here!

Did you notice that the guy used the 2nd bedroom at 57 Bond Street as an office? His new place, the “2,420 sq ft” Manhattan loft #4G at 416 Washington Street in the River Lofts in northwest Tribeca has a floor plan that features 4 bedrooms (two of which are just dying to be combined). Did that loft really sell with a single listing photo?? Maybe, but the short-lived unsuccessful 2012 listing has many photos. That broker babble is a bit more enthusiastic and specific than the 2013 model, so let’s use that:

Unlike the 10-unit 57 Bond Street, in which the building amenities were limited to downstairs storage, River Lofts is a full service condo “with Garage, state-of-the-art Fitness Center and Bike Room” (doorman, obviously), all accessed from the elevator.

On the market only 7 weeks in early 2012, loft #4G zoomed through a year later: asking $4.45mm as of April 12, and in contract by April 27 at the $4.42mm at which it closed on July 15. (Maybe he spent a week in a hotel, but he sold the 57 Bond penthouse on July 10.)

Let’s review the trade: other costs aside, the guy got $3.8mm for the penthouse in Noho, then paid $4.42mm for #4G in a quieter part of Tribeca, close to the river but not so close to subways. For the $642,000 spread he gained over 1,000 sq ft of living space (including 2 additional bedrooms), in a white glove full service condo; he gave up over 1,000 sq ft of roof top terrace. While he did very well in his 2007 to 2013 Noho penthouse ownership ($1.2mm gross gain), he just paid a price per foot building record at River Lofts. Obviously, it all made sense to him.

*hate to look at feet again, but they made me do it

I’ve been picking at this sore just recently, and I really hate to do it, so I will make this quick. You will see that the deed record for the 57 Bond Street penthouse notes the interior space is “1,344 sq ft”, while the listing says “1,470 sq ft”. I assume that the deed record matches the measurement in the Condominium Declaration Exhibit A that the city uses for real estate tax lot purposes. I will stay up on the high road and assume that there is some basis for “1,470”, perhaps in a “gross sq ft” measurement in the Condo Dec. As is my custom, I use the deed record measurement as a consistent, if arbitrary, standard in my Master List of Downtown Loft Sales, as I have been doing for almost 5 years now.

Let’s stick on one of the shortest and most dynamic downtown Manhattan loft streets, and complement the unusually low sale of a 1980s residential loft coop conversion I hit yesterday at 20 Bond Street (August 26, with too many walls, 20 Bond Street loft sells (too low?) before gut renovation) with the resale of one of its new and fancy neighbors. There’s a world of difference between a 20 Bond Street loft selling at $957/ft (two of them selling at that price, in fact) and the “1,512 sq ft” Manhattan loft #2A at 48 Bond Street selling on the same side of the same block at $1,736/ft by the folks who bought this as a new development in 2008. While that near-neighbor contrast is striking, I am also fascinated by the 29% gain over what these original owners paid, as no one would argue that the overall Manhattan residential real estate market is up to that degree since The Peak.

This is what they mean when they say a loft in a “developing area” has the potential to outperform The Market.

the very picture of an efficient layout

Uptown, an “apartment” over 1,500 sq ft would likely feature 3 bedrooms, or 2 and a dining room. In loft-y downtown Manhattan, notice how modest the room dimensions are to even get 2 bedrooms: the larger (master) bedroom is just 14 x 12 feet. The only “corridor” in the loft hardly earns that name, as there’s about a 6-foot transition from the public space to the (foyer?) from which one enters each bedroom and the second bath. In other words, there’s very little wasted space, as is typical of lofts and atypical of “apartments”, in which what I call “wasted” space they call “gallery”.

The footprint is about halfway between square and classic Long-and-Narrow, with a single exposure that mandates the placement of rooms and allocates plumbing to the dark wall. At a proportion of roughly 3:5, this could be a Short-and-Squat. There’s not enough volume, and no nooks or crannies to create visual interest, but it is what it is: a series of rectangles leavened by tall ceilings, big windows, and top of the line finishes. In truth, more “loft-like” than loft to a snob (hello!), but clearly built to mimic the nearby classic loft scale.

One might call loft #2A a downtown loft for uptown people, as I did the even more loft-y second floor loft in the Flatiron turn of the century residential loft conversion that I hit in my August 23, is 2nd floor loft at 170 Fifth Avenue the most beautiful in Flatiron?. One of the uptown ‘tells’ in those Flatiron lofts was that the kitchen were all but closed off from the main room. Note the kitchen shape, placement, and sliding doors on the #2A floor plan. This is a kitchen made to be closed off, a most un-loft-y concept.

Perhaps the choice was made to prefer storage space over a loft feel, as that large closet at the entry is one of only a few storage spaces in the entire loft. But if this were designed as a (modern) loft, I’d image a smaller entry closet oriented E-W and that east kitchen wall being open above the sink.

The choice, in retrospect, seems clear: attract uptown “apartment” people to one of the loftiest and charming blocks of lofty Noho by avoiding an open kitchen. Obviously, there’s a vigorous market for this space, in this place.

back when new Bond Street was young

If you didn’t do the math to back out the recent seller’s purchase, here’s the crib sheet: the guy paid $2,036,500 when he bought from the sponsor on April 24, 2008. That is an essentially at Peak price, being so soon after the First Quarter of 2008 (the high water mark for recorded deeds in Manhattan … so far), but I can’t tell when the contract was signed. (With new developments, contracts often well precede closings, of course, especially in those buy-from-drawings days.) If the adjoining loft is any indication, our data-base shows that #2B was first offered for sale in May 2007 and went to contract in November, also closing in April 2008. (I hit that one in my November 21, 2012, man takes small nip at big dog: 48 Bond Street loft resells 41% above 2008, in which I also opined that it “[l]ooks as though the sponsor left some money on the table back in the day”.)

the new kids on the block that have driven prices very far very fast are 40 Bond and 48 Bond. 40 Bond is the 31-unit Ian Schrager project with "five star hotel services and amenities", in which original units can still be had for as little as $3.5mm for "1,269 sq ft" (#6D) or as much as $9.95mm for "3,288 sq ft' (#9A).48 Bond is the smaller (17 unit) Deborah Berke designed project that has a "3,141 sq ft" full floor unit left, asking $5.15mm.

Note that there was only one loft left (without a contract) at 48 Bond Street in November 2007, just a very short time before The Peak in the overall Manhattan residential real estate market. That’s very veryvery good timing for a developer, perhaps more lucky than good. In my April 27, 2010, 48 Bond Street closes up 400% since 2008, but ..., I described 48 Bond as perhaps the single most fortunate new development in terms of timing, and (again) about how this one and 40 Bond Street reset values on “this formerly sleepy Noho block”. (Click through for more.)

hot area warms to Berke

As noted, I wondered in that post about #2B last November 21 about the developer leaving money on the table in 2008. That had become a ‘thing’ a week later. When I hit the sale of the “1,590 sq ft” loft #3A in my November 28, 2012, again running with the bulls at 48 Bond Street, up 18% over 2008 this time, I noted that “original buyer at $2,316,518 just sold at $2.745mm, a gain of 18% [and that t]he Berke bonus seems to be growing”. Not to overwhelm you with block quotes (Blog Selfies??), go to that post for the details on the degree to which resale values have vastly improved on 2008 sponsor prices. (Hint: look again at the title of that November 21, 2012 post.)

So, yes, I think the sponsor left some money on the 48 Bond table in 2008. But there’s a huge caveat: this was one of the best-timed new development in that frothy era, and I noted above that #2B took about 6 months to get into contract. Presumably, a higher asking price would have taken more time, in a period that (in perfect retrospect) fortune went to the prudent rather than to the bold. Nicely played, 48 Bond Street developer; nicely played.

With a Manhattan Loft Guy tip of the hat to all those original buyers, as well. Fortune is smiling on Bond Street.

about your feet (again)

One last aside …. You will drive yourself crazy if you use the interior room dimensions to try to measure the loft inside the exterior walls, so please don’t try that. Trust me: you’ll get a full rectangle tantalizingly close to “1,512 sq ft” but then you’ll estimate the cut-out in the middle of the north wall (200 sq ft??) and gnash your teeth. Your dentist and Manhattan Loft Guy agree: don’t gnash your teeth, but assume that “1,512 sq ft” is an official number taken from the offering plan and refer (again) to the link in yesterday’s post about the scandal that the Manhattan Real Estate Industrial Complex is unable (unwilling!) to address.

Even if you haven’t seen the “2,300 sq ft”* Manhattan loft on the 5th floor at 20 Bond Street, the broker babble, floor plan, and listing photos contain some hints that this Noho Long-and-Narrow recently sold as a project. The brief description of the interior of the loft is all about the bones (“glorious light and fabulous NoHo views through 15 windows, hardwood floors, 10ft high ceiling”). The floor plan has an office / studio across the front windows and the kitchen and a bath across the back windows, two modestly sized “bedrooms” (one of which is less than the 8 feet wide required for a legal bedroom); both baths are extravagantly long, with one and two windows; and that huge kitchen features an enormous island (the island is nearly piano shaped, but the actual piano in the main listing photo is in the “dining area”. The photos show some kind of composite kitchen floor, simply laid on top of the hardwood floor and a short but tall inlay of glass brick on that bathroom wall next to the kitchen.

No offense intended to the sellers or their design team, but this layout and these finishes reflect that economy was the principal driver for layout decisions, back in the day. (Bet you a quarter that this loft has been substantially untouched since this building was converted to a residential cooperative in 1984; if anything changed, I suspect the narrow bedroom was added.)

The new owners are going to erase the lines and start over; bet you two quarters on that. If the new kitchen ends up where the old one is, that will be because they have maximum flexibility from the 5 windows on the long west wall, and may be able to get enough bedrooms (for their purposes) on the narrow south wall and taking one or two west windows. I doubt that second bedroom survives, or if a large bathroom remains in the northwest corner.

Because the long line of west windows are so critical to the loft and because the lot immediately to the west of this building is undeveloped, every single person interested in the loft (there were many at the open house I attended) asked about future development nearby. The very professional selling family team was prepared with very professional written materials indicating (as I recall) that the lot to the west was too narrow for multi-story development and what the planned projects across Bond Street would look like.

I doubt that issue was what kept this loft from finding a buyer from finding a buyer for 5 months (to market at $2.35mm on September 29, in contract by March 28 at the $2.2mm deal that closed on June 27). More likely, the issue was finding the right buyer to take on the renovation.

coincidence can be sweet (or, efficient)

The parallel between the 5th floor history just recited and that of the 3rd floor when it sold almost a year ago would be really eerie, if not for the first two incorrect prices:

Jan 18, 2012

new to market

$2.65mm

Feb 21

$2.495mm

April 17

$2.35mm

July 9

contract

Sept 19

sold

$2.2mm

Same sales price, same (last) asking price, almost the same amount of time on the market, same lack of bragging about finishes in the babble. At this height there are only 2 windows on the west wall, severely reducing the flexibility, but the pix and floor plan also look “1980s!” to me. (Note: single bathroom, way in the northwest corner.)

Obviously, the 5th floor sellers noted the 3rd floor history when they came to market a week after the 3rd floor sale. They started where the 3rd floor ended ($2.35mm) and ended in exactly the same place ($2.2mm). Efficient market theorists toasted this pair, though they should have hiccuped a bit over market timing (stronger overall market when the 5th floor was active) and perhaps over the value of being two floor higher with 3 more west windows. Yes fans: the 5th floor should have sold for more in an efficient market; if didn’t so maybe it ain’t.

*about your feet...

StreetEasy has no measurement for these two lofts, but out listing system says “2,300 sq ft”. You’ve probably already noted the room dimensions on the 5th floor floor plan, which (if accurate, especially at 21’6” wide) make it difficult to get to 2,300 sq ft inside those exterior walls. But the 3rd floor plan has a very different width (24’6”), which will go a long way to getting you closer to a 2,300 sq ft total, even carving out the public stairwell, especially if you count from the middle of the exterior walls.

Personally, I can see “2,300 sq ft” as a reasonable and conventional measurement for the coop lofts at 20 Bond Street, as Property Shark has the lot and building measurements as 100 x 25.67 feet and 100 x 26 ft, respectively, with the former having a veneer of accuracy for being precise and the latter being (apparently) a rounded number. If the building really has a footprint of 2,567 sq ft, “2,300 sq ft” interior is looking better and better, even using a coop measuring stick. (For my first comprehensive rant on this blight on the Manhattan real estate “profession”, see my November 3, 2010, the square footage dilemma: REBNY "leads" by protecting brokers, not buyers, but be warned; it is comprehensive.)

Close’s argument boils down to a claim that no one should be able to build in such a way that eliminates his light because the original use of that space was as a courtyard between “his” building and a now demolished townhouse. If he were not the special artist that he is, with the physical limitations that he has, this would be an almost laughable argument. If keeping that space empty was so important to him, he could have bought it, probably with the “obscene” money he makes for his portraits.

There’s some terrific local history in the links in the post, including about the artists who 'made' Noho. Definitely worth a read, for that alone.

Mar. 5, 2013 - our long national nightmare is over, as 57 Bond Street loft sells with strangest history you will see today

every party needs a pooperThis post may only be for the fanatic spectators of the Manhattan residential real estate game who collect odd price histories. I am going to ruin the suspense by telling you that the “2,110 sq ft” Manhattan loft (with “1,045 sq ft” private terrace) #2W at 57 Bond Street sold (finally!) on December 28 at $3,910,170. It just wouldn’t feel right to make you wait until the bottom of this 26-month listing history to get to the surprise ending (omitting brief periods of hiatus):

Oct 25, 2010

new to market

$4.25mm

Jan 7, 2011

$3.995mm

May 7

$3.75mm

July 22

change firm

Feb 9, 2012

change firm

$3.65mm

July 10

hiatus

Sept 20

change firm

$3.925mm

Nov 26

contract

Dec 28

sold

$3,910,170

If I had not already given you the clearing price, you’d be shocked by the 9th line of the history, wouldn’t you? As it is, you are just perplexed. As am I … wondering why a loft that found a buyer in November 2012 above $3.9mm could not have done that for the 18 months beginning January 2011 when it was offered at no more than $3.995mm, or especially during the subset of 15 of those months in which it was offered no higher than $3.75mm.

How about this bit of head scratching: after being publicly ignored for those 15 months at $3.75mm and $3.65mm, the sellers were able to hold stubbornly enough to a new (and improved!) price for the 9 weeks it took to get a contract signed at a nominal (if hard fought) discount, $260,170 above the price that the public knew had been unsuccessful for most of 2012.

I will speculate about how this may have played out, but not until considering the charms of the loft.

inside and out on the ‘It’ BlockI walked by this building with a buyer client a few weekends ago, talking about how this block had become the hottest block in Manhattan. (Meaning, not merely that it was popular, but that there were huge increases in values up and down the block.) This newly built 10-unit “boutique” condominium did not so much provoke the hotness as anticipate it when it was finished in 2004. It was well positioned to take advantage of the momentum pushed by ooh-la-la neighbors.

Of course we have been on Bond Street before, talking about how that small stretch of Noho has taken off after just two new residential loft uber-condo developments (starting with my November 1, 2007,re-setting values at 57 Bond / there goes the neighborhood, from way back in the day); and of course we were here just a week ago, marveling at a rather extreme gain from one of those 2008 new development sales (that’s my November 21,man takes small nip at big dog: 48 Bond Street loft resells 41% above 2008, of course). The recent sale of the “1,590 sq ft” Manhattan loft#3A at 48 Bond Street does not approach the 2008-to-now appreciation garnered by the loft with terrace from last week’s post, but at $1,726/ft it ain’t too shabby. Things (values) are looking up on Bond Street. Again.

the new kids on the block that have driven prices very far very fast are 40 Bond and 48 Bond. 40 Bond is the 31-unit Ian Schrager project with "five star hotel services and amenities", in which original units can still be had for as little as $3.5mm for "1,269 sq ft" (#6D) or as much as $9.95mm for "3,288 sq ft' (#9A).48 Bond is the smaller (17 unit) Deborah Berke designed project that has a "3,141 sq ft" full floor unit left, asking $5.15mm.

meanwhile, back in the loft ...Start with #2W’s bones: 12 foot ceilings and 8 foot windows, a floor plan that wraps around the huge terrace such that the main living space has 2 exposures to the terrace, with the bedrooms also facing the terrace. The finishes sound like what was built in 2004, and appear to have held up well, both in condition and in competition:

the open Chef’s Kitchen features Poggenpohl cabinetry, granite countertops, a Sub-zero 36" refrigerator, a Viking gas range and oven, a Bosch dishwasher and a Sub-zero wine cooler... maple floors …. Master Bedroom Suite offers abundant closet space with a large walk-in and a five-fixture marble and granite Master Bath complete with a Zuma 6’ deep soaking tub and separate steam shower. The second and possible third bedrooms share a well-appointed marble and granite bathroom with a separate shower and deep soaking tub

No kidding around, the layout maximizes the utility and charm of that huge terrace, perhaps justifying this flowery bit of broker babble: “the developers were careful to integrate this desirable external environment into the allure and ambiance of this superb home”.

Especially given the size of the (uncredited) planters built along the outer terrace edges (added during the long marketing campaign, as the early listings show a more spare, unplanted terrace), you’d never know that you were just one flight above, and overlooking, Bond Street. The planting provides great separation from the building edge, while not limiting in any way views of the truly magnificent loft neighbors across and down the block.

This terrace is, no kidding, drool-worthy. And rare. (Other units in the building have small balconies [as pictured from the #2W terrace] or small terraces [like #2E].) That feature makes it hard to comp and (in The Babble Handbook) “unique”. The sellers obviously maintained that the terrace was worth a lot; The Market took a while to agree.

comping is _____When loft #2W was first offered for sale in late 2010, none of the 10 residential units in the building had re-sold. For a 2004 new development, it had taken the sponsor quite a long time to sell out, with the last sponsor unit not selling until the “2,125 sq ft” #4E sold in April 2008 at $2.918mm. Then the original buyers buckled down to enjoy the lofts, and the block.

While the #2W owners were trying to become the first resellers (but were beating their heads against The Market), the “2,125 sq ft” #3E came to market and got snapped up (12 days to contract) at the ask of $3.2mm on July 28, 2011. Still, the #2W owners held on. Of course they proved to be right, though it took another 16 months for us (and them) to discover that.

The #3E balcony is small enough that I am going to ignore it to run a ballpark comp analysis for the interior space of #2W as of the July 2011 sale of #3E at $1,506/ft. That sale would value the #2W interior at $3,177,412, meaning that the sellers were asking $572,588 for the terrace, or $548/ft, or only 36% of the value of the interior space. (For more on riffing with The Miller to value outdoor space, see my May 6, 2010 post.)

Here’s the funny thing: based on the #3E sale in July 2011, the #2W sellers were right but The Market was wrong. I would have argued at that time that (assuming a rational market, of course) the #3E sale implied that loft buyers who appreciated the building and who wanted vast outdoor space should pay at least what they were asking after July 2011. The continued rejection of the $3.75mm asking price aside (as if!), there was a very rational argument to be made that the terrace was actually worth more than 36% of the interior space on a $/ft basis, so the true implied value of #2W based on #3E at $1,506/ft was probably worth … (wait for it) … $3,963,792.

I had not known when I started this post that the path of deconstructing this listing history would involve riffing with The Miller, as I did not realize until digging that this terrace is unique in the building (actually unique, not just babbling unique). Nor did I realize how applying a July 2011 neighbor’s sale would impact the analysis.

The Market was wrong until it was rightI am very comfortable with that implied value of $3,963,792 for #2W as of July 2011 based on the #3E sale because I am very comfortable with valuing the terrace at 50% of the value of the interior. The terrace scores high on utility, being directly outside all the rooms and accessible directly from the living room; the terrace is just under the proportion of the interior that The Miller would wonder about discounting it as ‘too large’; the shape of the terrace is extremely functional; and it provides separation of the living space from the street. That’s an easy 50%; if pushed, I could make an argument for higher.

Having seen this rough math ($3,963,792 looks like a precise number but it is the product of rough math), now I would really like to know what the agent-seller conversation were like. This is getting more weird, as I just noticed that when the sellers changed firms the week before #3E closed, they listed with the agent team that had just sold #3E.

As we know, in six months that team was not able to sell #2W while asking $3.75mm, arguably a lower value than they had gotten for #3E. It wasn’t for a year after #3E sold (and yet another change in listing firms) that the sellers found the agent team that would sell their lovely loft with magnificent terrace, and they did it by raising the price to $3,925,000 in July 2012, (coincidentally???) right in the ballpark implied by the #3E sale in July 2011.

This is beginning to feel like Rod Serling territory for me, as The Market did in November 2012 what it should have done long before: value #2W like #3E, with an appropriate adjustment for the huge terrace.

Just to take a cold shower for a minute … ‘reasoning’ backwards from market facts that cannot be rationally explained is a fool’s errand. The fact that #2W sold above $3.9mm in December 2012 means it should have sold above the asking prices from at least May 2011 into July 2012. But it didn’t sell then. The fact that #3E sold in July 2011 at $1,506/ft means #2W should have sold at a similar adjusted value, then and afterwards, but it didn’t (for another year).

I’ve enjoyed peeling the onion on this price history far more than I originally intended even when I wrote the headline as it appears up top. But I can’t explain why The Market forced #2W down this long, tortured path. As a connoisseur of Manhattan loft market oddities, I love that #2W came out in the ballpark that #3E implied in July 2011. I will never walk down Bond Street again without looking up at this terrace and smiling.

Feb. 7, 2013 - not gussied, 46 Great Jones Street loft sells after 363 days, down 42% from first ask

I don’t find that in my (out of date?) handbookI don’t think I’ve seen this locution to describe an “authentic” Manhattan loft before: “NOT Gussied Up”. I think it like it, but the fact that it sticks out probably means it is effective. And, because The Babbling Agent Handbook says you can never gild the lily too often, that bit of broker babble is followed by “They Dont Make em Like This Anymore” (too bad about the apostrophe dropping there, eh?). I don’t like that in this context, as it suggests a lack of confidence in the no-gussy punch, especially as that is followed by “Beautifully Authentic”. I think they have set the tone here. Again. And again. The good news is that the subject of all this babbling, the “4,000 sq ft” duplex Manhattan loft on the 3rd and 4th floors at 48 Great Jones Street, lives up to the billing (if not, for a long time, the pricing).

You’ve got air conditioners at the top of windows, fans with pull chains (authentic!), junction boxes on beams, exposed brick, a raised kitchen (presumably to run waste lines), at least one old school radiator, and exposed pipes and mechanicals galore. The pictures tell the story, but either one element is not as impressive as it sounds, or it as not pictured: I was disappointed not to have recognized that “Curving Corrugated Sculptural Steel Wall Delineates Whats Now A Workspace”. Of all the “authentic” elements, that is the one I suspect would have the greatest chance of surviving a Buy & Reno. (Or perhaps the “Uber-Cool Custom Bauhaus Water Basin & Stand”, though that sounds awfully gussied up.)

a double Long-and-Narrow can be limitingThe floor plan shows the same Long-and-Narrow footprint repeated on each floor. While I appreciate the enthusiasm behind describing the space as “Expansive Size (Whopping 3500sf)”, the footprint actually shows the limits of the Long-and-Narrow form. The loft is less than 21 feet wide, with 3 windows at each end, and is squeezed at both ends; at the south by the public stairwell leaving room for only one “room” at that end, and at the north by all the plumbing along the west wall.

Unless you radically reconfigured by moving the kitchen south along the long wall to open up room for a bedroom in the back of the 3rd floor and/or moved a great deal of plumbing on the back of the 4th floor to squeeze two bedrooms on that back wall (the 3 windows make it hard to allocate that [mere] 21 feet of width), you are left with a “Whopping” One Bed Wonder. Seriously: there are no side windows for (true) bedrooms, the front on each floor is too shallow to separate and is very far from any plumbing. This is a very challenging footprint, the more so because there is all this “space” but not (really) much “room”.

Add up-ing and down-ing to the list of challenges. Personally, I hate spiral stair cases, especially in large spaces, and I believe that the $4mm loft buyer pool shares my antipathy. There’s nothing grand or luxurious about a spiral stair case of conventional scale, like the one here; either the Buy & Reno buyer will vastly increase the diameter of the spiral, or will install a straight or single landing stair. In each case, the new floorplan will have larger holes for the stairs (probably back toward the middle of the east wall), again limiting the floor space.

Just as the proverb dictates that you can never be too rich or too thin, in Manhattan loft terms you can never have enough space. I am sure clever architects will do better than I have in scanning the possibilities here, but this whopping “3,500 sq ft” plays much smaller than it is.

let us prayThe litany of prayers asking prices reflects that The Market also saw this space as challenging; certainly much more challenging than the sellers and agents saw it (you need to also look at the StreetEasy history after the seller changed firms, here, to get this full story):

Nov 11, 2011

new to market

$6mm

Dec 15

$4.7mm

Feb 22, 2012

$4.25mm

April 10

$3.85mm

May 11

change firms

$3.999mm

Aug 13

$3.8mm

Sept 13

$3.869mm

Oct 15

$3.49mm

Nov 9

contract

Dec 20

sold

$3.49mm

Yesterday I hit a post-renovation Tribeca loft with a similar sad story (February 6, 106 Duane Street loft sellers built a beauty then aimed at the moon (fell more than 200,000 miles short, alas)), with 11 months to contract, 7 prices, and two firms. If it is fair to rank the pain of others, those folks put a lot of money and talent into their loft, only to have The Market say “meh”; these folks in Noho took a year to get a contract, using two firms and 8 prices, to end up selling at a 42% discount to where they’d started. Apart from the “Uber-Cool Custom Bauhaus Water Basin & Stand”, of course, they proudly did not gussy the place up in however many years they lived there “authentically”. There’s likely to be little consolation in that for them personally, but The Market is what The Market is. In this case, as yesterday, cruel, but today not as personally cruel as to heavily discount an expensive renovation.

This likely gut renovation project with a very challenging footprint sold for $872/ft on a block that is more funky Noho than cool Noho. Oh how I wish I could see what the buyers do in their renovation!

Nov. 28, 2012 - again running with the bulls at 48 Bond Street, up 18% over 2008 this time

the Berke premium growsOf course we have been on Bond Street before, talking about how that small stretch of Noho has taken off after just two new residential loft uber-condo developments (starting with my November 1, 2007,re-setting values at 57 Bond / there goes the neighborhood, from way back in the day); and of course we were here just a week ago, marveling at a rather extreme gain from one of those 2008 new development sales (that’s my November 21, man takes small nip at big dog: 48 Bond Street loft resells 41% above 2008, of course). The recent sale of the “1,590 sq ft” Manhattan loft #3A at 48 Bond Street does not approach the 2008-to-now appreciation garnered by the loft with terrace from last week’s post, but at $1,726/ft it ain’t too shabby. Things (values) are looking up on Bond Street. Again.

The broker babble and pix reveal that loft #3A has the standard-but-ooh-la-la finishes installed by the developer, in this case with the floor to ceiling windows looking south across Bond Street. The floor plan is a straight 2-bedroom-2-bath array with that single exposure, a plan that could have been created with one of the cookie cutters used to “design” so many modern condos. Yes, it is a “functional and well laid floorplan”, but the space is redeemed by the high ceilings and large windows.

The sponsor thought this space was worth $2.275mm in 2007, and got the original buyer to pay full freight plus the New York City and State transfer taxes that buyers only pay when the sponsor has the leverage to insist. Total consideration paid by that original buyer was $2,316,518, on April 9, 2008, just as The Peak of the overall Manhattan residential real estate market was peaking. (With that contract having been signed by September 25, 2007, the anal among you would consider this a peak sale, with the closing artificially delayed until the Certificate of Occupancy had been issued, but let’s not quibble over such things today.)

That original buyer at $2,316,518 just sold at $2.745mm, a gain of 18%. The Berke bonus seems to be growing, as we will see after looking at the most recent details.

For a loft that sold at a premium to the ask, #3A took its time getting into contract:

June 1

new to market

$2.67mm

July 23

contract

Nov 7

sold

$2.745mm

comps show Berke-mentumThat’s 8 weeks to get a contract at a 3% premium to ask, which sounds more like a non-trivial premium when expressed in dollars: $75,000. At the time that #3A was being actively marketed the prior sale in the building was the “1,551 sq ft” #4B on June 10, 2011 for (only) $2.195mm, or $1,415/ft. That loft has the same 2008 standard-but-ooh-la-la finishes as #3A and a very similar floor plan; the only differences are that #4B has a small balcony and its single exposure is north, to the rear of the buildings on Great Jones Street. Personally, I don’t see the view difference as worth anywhere near the difference in market value between #4B and #3A, so the fact that they sold 18 months apart is likely to be much more significant than the shorter distance from the windows of #4B to the back of Great Jones compared to a longer ‘view’ at handsome Bond Street facades from #3A.

But the scale of the difference is rather startling. The two units are functionally identical. with the slight exception being the small balcony in favor of #4B. Loft #3A is a little larger at “1,590 sq ft” of interior space, so the dollar per foot difference of $1,726/ft and $1,415/ft is not quite as large as the absolute dollar difference between $2.745mm and $2.195mm, but however measured the difference between these two sales is startling.

This gap is especially impressive in comparison to the last “A” line sale, #7A on February 23, 2011. Same finishes but better views than #3A, babbled as “sun drenched South facing ... with clear views onto Nolita”, #7A was offered less than two years before #3A, asking $2.67mm. One six-figure drop preceded a December contract and the sale on February 23, 2011. With the height advantage but the disadvantage of closing 21 months before #3A, #7A cleared at $2.395mm. Those 21 months were enough to earn #3A a 15% premium over the same loft 4 floors higher.

That is evidence that The Market is warming to Ms. Berke’s work, and its prime Noho location.

not so unusual, except for scaleThe last few resales at the Deborah Berke designed oh-so-successful 2008 new development 48 Bond Street have been above their 2008 prices, so it is not is so unusual that the “1,551 sq ft” Manhattan loft #2B (with “1,000 sq ft” terrace!) resold above the 2008 purchase price, but reselling at 41% above is rather unusual. Looks as though the sponsor left some money on the table back in the day, probably due to having undervalued that terrace. Let’s check the data before probing for explanations....

(*Of course, the 2008 recorded sale prices are not the revenue received by the sponsor, but the total expense [price plus New York city and state transfer fees that would otherwise have been paid by the seller; that total is what the buyer was willing to pay.)

lovely lofts on remade blockIn my April 27, 2010, 48 Bond Street closes up 400% since 2008, but ..., I talked about how this new development may have been the single most fortunate in terms of timing, and about how this one and 40 Bond Street remade this formerly sleepy Noho block. First this:

If there is another new development in Manhattan (lofts or otherwise) that timed The Market more perfectly than 48 Bond Street, I can't think of it. The two key calendar points for The Market were The Peak (roughly, deals closing in the first quarter of 2008) and The Freeze (the nuclear winter that followed the Fall of the House of Lehman, September 2008).

There were 11 sales in this new development in March and April 2008; two were in July 2008; one was in October 2008 (on a pre-Lehman contract, no doubt). (The building was built as a 17-unit condop, but the two 6th floor units were sold combined in April 2008, the 9th floor sold as a unit in October 2008, and I don't see any record of a 10th floor unit changing hands.)

Then this:

Way back in November 2007 I observed that this project and another just down the street changed the values in the neighborhood. From that post of November 1, 2007, re-setting values at 57 Bond / there goes the neighborhood:

the new kids on the block that have driven prices very far very fast are 40 Bond and 48 Bond. 40 Bond is the 31-unit Ian Schrager project with "five star hotel services and amenities", in which original units can still be had for as little as $3.5mm for "1,269 sq ft" (#6D) or as much as $9.95mm for "3,288 sq ft' (#9A).48 Bond is the smaller (17 unit) Deborah Berke designed project that has a "3,141 sq ft" full floor unit left, asking $5.15mm.

For all that appears in the broker babble of the 2011-12 resales at 48 Bond Street, these lofts were all in original condition when resold. Thus, the only difference between #4B at $2.195mm in June 2011 and #2B in October 2012 was (a) (slightly) different market conditions, but more so (b) that “1,000 sq ft” terrace.

playing with numbers is fun, but … informative??If you assume that market conditions were flat (to make the math really easy), the terrace was not quite a seven figure amenity, at $955,000. If you assume that there were differences in market conditions, so prefer to comp with a more rigorous definition of “recent”, you can use the #3A sale this month as the base line for interior values, then riff with The Miller to value the #2B terrace.

At “1,590 sq ft”, #3A is a little larger than #2B (and #4B) at “1,551 sq ft”, but the #3A floor plan has only 2 bedrooms and one exposure, while the #2B floor plan has 3 bedrooms and two exposures. Arguably, therefore, the #2B interior should be more valuable on a dollar per foot basis, but let’s ignore that complexity for riffing purposes. Simplified, the #3A sale on November 7 sets a value of $1,726/ft for late-2012 interior space at 48 Bond Street. That implies that the #2B interior was worth $2.678mm, leaving the terrace at (only) $472,000, or half the value using the #2B v. #4B (2011) comp. At the thankfully round “1,000 sq ft”, that comes to $472/ft (d’oh!), or 27% of the value of the interior.

That 27% strikes me as rather low, given the high utility of a terrace accessed directly from the public space and from the master suite, but perhaps that is appropriate given that it is the second floor, mid block (no view, and a bit of a canyon), and is a little too big in relation to the “1,551 sq ft” interior for prime valuation. Net-net, I can live with that, especially as the November 7 #3A sale is a very persuasive comp for interior values n this building.

With that, I will quit for the holiday. Don’t know if I will take a family break to post between meals on Thanksgiving, or on catatonic Friday, or on traveling Saturday. See you sooner, or later.

Oct. 23, 2012 - were sellers of 21 Astor Place loft more motivated this year, or was market stronger than in 2011?

the numbers say there is a story, but not what the story isThe sellers of the “1,436 sq ft” Manhattan loft #10A at 21 Astor Place gave it a long shot last year, asking $2.25mm almost six months before taking a break fr 10 months. When they did come back this Summer, it took less than 4 weeks to sign the contract that recently closed. You can’t actually see the thing that made the difference in those two efforts, but here is the much-less-than-full-story outline:

April 7, 2011

new to market

$2.25mm

Sept 29

hiatus

July 18, 2012

back on market

$2.25mm

Aug 13

contract

Sept 25

sold

$2.05mm

To review: the same asking price that did not work for half of 2011 took only 26 days to get a signed contract in mid-2012.

There are two logical potential explanations; which do you prefer? Either (a) the sellers were resistant in 2011 to a compromise as small as 9% off the asking price, or (b) The Market could not produce a buyer at a reasonable discount last year, but could do so (easily; quickly) this year. If there is another alternative explanation, I don’t see it.

not a push for the buildingUnsurprising for what was a deluxe loft conversion at the top of Noho in 2003, I don’t see anything in the perfunctory broker babble or the listing photos to suggest that loft #10A has been improved since it was purchased from the sponsor in 2004 (for $1,318,633, by the way). Even those glass closet doors in the master (pic #7) make an appearance in the #4F broker babble from earlier this year. That babble gives you a better idea of the finishes and proper proper names that were standard in the building.

That #4F sale, by the way, was at only $1,218/ft, which is both a far cry from $1,428/ft for #10A, but well below the only other two sales in the building since the thaw. This sequence of the only four sales in the building since mid-2009 suggests that the #10A sellers did not over-reach by asking $2.25mm:

#10A

Sept 25, 2012

$1,428/ft

#4F

Mar 21, 2012

$1,218/ft

#6F

July 1, 2011

$1,457/ft

#7F

May 17, 2011

$1,917/ft

Of course that is a pretty extreme range for same building sales in a 2003 conversion, but the most extreme outlier (#7F) was upgraded and was improved; it also had a celebrity feature that should not have increased its value, as I discussed when The Son-in-Law sold the loft in my June 11, 2011, 21 Astor Place loft sells up 21% in 2 years.

when there is no fact-based explanation, retreat to an aphorismI will grant you that the building value history is thin, leaving open the possibility that The Market was not ready to clear #10A in 2011 at $1,428/ft but had matured enough to accept that value in 2012. But I think that history is enough to suggest that #10A was not (in a purely theoretical sense) over-priced in 2011, despite not selling for 6 months.

And I have no information about whether the sellers rejected an offer in 2011 that could have gotten to the same contract price then as worked a year later. Given an eventual discount of only 9%, I doubt it.

In the absence of facts supporting a reasoned analysis, it is not that I give up but that I retreat. I retreat to this: The Market is The Market is The Market, and sometimes (in the context of a specific transaction) it cannot be explained. No matter how much fun it may be to wonder.

reading between the lines, and pixYou could just “[p]aint and move right in” to the “2,300 sq ft” Manhattan loft on the 4th floor at 55 Great Jones Street “or [you could] update with your own vision”, as the broker babble outlines your options. But in view of the fact that StreetEasy has only two interior listing photos and no as-is floor plan (the listing floor plan is an “alternate”; the Corcoran website has the current floor plan [click on “2”] and 3 more interior photos), the smart money says you will at least update, and probably renovate. The “renovated bathrooms [and] open kitchen” notwithstanding, the babble is all about bones, and potential.

easily convertible to two or more bedrooms. Paint and move right in or update with your own vision, this flexible apartment with unobstructed light and views is an amazing opportunity. A manual pressure elevator opens up to your own full floor apartment with sixteen over-sized windows, hardwood floors, 11'+ ceilings, renovated bathrooms, open kitchen, W/D in apartment, and an open floorplan with north, east, south and west exposures. This intimate self-managed coop is located in the perfect NoHo location ….

Not that these choices made it hard for The Market to swallow this loft:

That’s 30 days to contract after a bidding war, to get $1,016/ft, $181,000 or 8% over the ask. Not hard to swallow at all.

old school includes self management, manual pressure elevatorI am not sure which fact about the building is a more potent indicator of an old school Manhattan loft building, that it is self-managed or that it has a manual pressure elevator. Each is fitting for a 7-story 6-unit coop that was formed (possibly by residents) in 1980. Even many of those pioneering coops have moved to professional management, rather than doing everything themselves or hiring their own professionals and maintenance workers. And people get tired of having to run a manual elevator back to the street level each time after they use it to get home with ‘stuff’. But not these hardy cooperators. (Yet.)

With all this ‘cooperation’, it is no wonder that the maintenance is $1,200/mo, a spare $0.52/ft that would put many other no-frills coops to shame. With one of the missing frills being a mortgage, the only part of the maintenance that will be tax deductible is for real estate taxes. That is a very conservative way shareholders to their successors.

don’t let the A.I.R. bogeyman get yaIt is nice to see a marketing campaign that both identifies a problem (“established AIR co-op”) and the practical (almost) solution (“AIR waivers are accepted”). It is a dirty little secret of the oh-so-hot Noho that there are buildings here zoned M1-A or M1-B, and subject to the same Artist in Residence restrictions for legal residential living in Joint Live Work Quarters For Artists as most of Soho.

That little wrinkle did not slow down the sale, or dampen the market, either.

The Bond Street effect in actionThe problem for the "1,100 sq ft" Manhattan loft #2D at 7 Bond Street is obvious from the floor plan, and only slightly less obvious from the photos: the four great big windows at the front of the loft (facing north?) are the only windows in the relatively small space. It is not really long enough to be a classic Long-and-Narrow Manhattan loft layout, more like a short and really narrow, but the footprint dictates where you put the rooms. In this case, don't buy it if you want another room of any kind, or a bedroom with windows, because you probably also will want a living room with windows. And a bedroom near a bathroom.

Uptown People won't live this way, but lots of Downtown Loft People do: sleeping in the dark, whether the sun is up or not. Not to mention, paying $1,500/ft for the experience.

Given the placement of the kitchen and bathrooms on the #2D floor plan, there is no real flexibility in the "1,100 sq ft" layout. Perhaps you could double up interior sleeping areas / rooms along that west wall, but then you’d have to reconfigure the entrance to the (present) bedroom and then live with the inhabitants of the new bedroom traipsing through the ‘master’ to get to the shower and tub. No surprise that this layout is inflexible: the loft is laid out to maximize the public space, with its four windows and 14 foot ceilings, at the cost of a second (interior) bedroom. (Remember this point; we will come back to it, below.)

assume that the modesty is earnedNot that you are going to get a fantastic renovation of brag-worth finishes for that $1,500/ft. Although the loft is babbled as “spectacular” and “magnificent”, that “seamlessly combines classic charm with drama”, most of that bragging is about bones and location (“on Bond Street, one of NOHO’s hottest and most desirable cobblestone streets in a Landmark Cast-iron Building”; “soaring 14’ ceilings, excellent light through four oversized windows north facing windows”) rather than interior finishes. The finishes include a “ beautifully renovated bathroom”, french doors between living room and bedroom, and a “recently redone kitchen”. None of the typical broker babble about mints, materials or proper proper names.

All in all, nice, but not no-detail-overlooked. In a no frills condo with few amenities (basement storage and a common roof deck), commensurate with low taxes and common charges.

Notwithstanding this modesty and inflexibility, this is a $1,500/ft loft.

great price, but not a top for the buildingAs you can tell from the number of times you see “$1,500/ft” here, I am impressed that this loft sold at this price. The seller might not have been, as he started on January 10 asking $1.795mm before dropping to the $1.695mm on February 3 that got him his contract by March 11 at $1.65mm. But the seller should have been impressed (in my opinion), as the last loft to sell in the building before #2D was the slightly larger (at “1,200 sq ft”) but otherwise similar loft #4A, which sold on December 16 for $1.55mm, or only $1,292/ft.

It is hard to see why there is a 16% premium (on a $/ft basis) in favor of #2D as a May sale in direct comparison to #4A 5 months earlier. If anything, the condition of #4A was better than #2D, with “custom lighting, exquisite wood flooring throughout, … [m]aster bedroom closet of your dreams, custom kitchen with Diva induction drop in stove in large granite island .... 1.5 elegant impeccable modern bathrooms“ and the promise that “[w]ords cannot fully describe the beauty of this apartment, you must see in person”. The text and photos read as a more luxurious environment than #2D.

Yet #4A sold for only $1,292/ft. (It did not seem like only $1,292/ft when I hit this sale in my January 3, transformed 7 Bond Street loft sells 8% above 2007, in a post that mainly focused on the peculiar co-ownership of loft #4A and the one next door, and then riffed on some Conventional Wisdom dear to the heart of The Miller and the focus of a major VToy piece in the New York Times.)

But #2D at $1,500/ft is not the high for the building, though I think it is still the most impressive.

The “1,100 sq ft” loft #5D zoomed through the market (starting on April 5 at $1.695mm, in contract by April 20, closed on May 29 at $1.765mm, a substantial premium). That one has a significantly different layout in the same footprint as #2D, with the kitchen pushed toward the windows to fit a home office of 8’4” x 9’, a home office that could double as a second (interior) bedroom (there is a crib in pic #5). And note how enthusiastic the #5D broker babble is, especially compared to the muted #2D babble:

gut renovated to the highest standard and features two full baths, eleven foot ceilings, ... a top of the line kitchen that will inspire any cook

The main listing photo for #5D suggests dramatically better views than 3 floors below. Loft #5D has greater utility than #2D, with that home office (nursery!). Loft #5D seems to have been renovated into better overall condition. That seller (is his dad the famous actor, Jason?) was looking for a slight premium over #2D when he brought it to market 3 weeks after the #2D contract, and provoked a bidding war that got a 7% premium over #2D ($1,604/ft).

As should be obvious by now, I think that the higher floor, higher quality, and greater utility of #5D over #2D should be worth more than $104/ft. The Market did not see it that way. I really hope the 32D seller was impressed with his price.

need to do research before asking this as a money-at-stake trivia questionHow many streets have odd-numbered addresses on the south side of the street, besides Bond Street?

are you following the disconnect here?Yesterday it was an artist’s loft of “3,300 sq ft” in the bottom of Soho that cleared for $742/ft (April 16, artist loft clears at $742/ft in south Soho, 307 West Broadway). Today it is the “2,000 sq ft” Manhattan loft on the 5th floor at 325 Lafayette Street at the bottom of Noho, which cleared recently for $2.32mm, or $1,160/ft, where the “possibilities” are “endless” and the Certificate of Occupancy may soon be changed from commercial to residential. Not all possibilities are priced the same, obviously.

Figuring out why, well, that’s the goods. No promises, but let’s get into the weeds on this sale and, especially, this south Noho sale compared to yesterday’s south Soho sale, both of which promise a total gut renovation. And compared to other lofts selling around the same values. Then taking into account some fancy accounting and other complicating factors. It is enough to make my head spin, but let’s begin at the beginning, and go from there.

no bragging at all325 Lafayette Street sit on the only block above Houston that Mulberry Street penetrates. Lafayette and Mulberry don’t quite meet at Bleecker, but they get very close, so 325 Lafayette has a funky shape, tapering towards the north end, with a virtually all windows along both long sides, plus two windows south. But aside from “27 windows, 3 exposures”, there’s no bragging about the bones. None. Nothing about classic loft elements like columns or beams (as yesterday), no tin ceilings, no brick walls. The floor plan shows 3 bedrooms and 2 baths, but if there is even a fancy faucet worth saving the agent forgot to mention it.

There are now bathrooms in opposite diagonal corners, and a kitchen in the middle of one long wall, so there seem to be enough risers to afford great flexibility in a new floor plan. Once demolition is done, this space will be the blankest of canvasses, with nary a column to be be worked around.

To review: someone just spent $1,160/ft for the opportunity to spend another (say) $300+/ft to create a dream loft. Not only is that a 56% premium over the same opportunity at 307 West Broadway yesterday (on a dollar-per-foot basis), that is a premium over other recent (going back only through February) interesting loft sales (looking only in Soho and Tribeca, and only around 2,000 sq ft), in one case after adjusting for condition (there are some serious Notes to Self … here):

the “2,300 sq ft” 114 Mercer Street #4 sold on April 4 for $967/ft well above ask as a “[v]ery well maintained live/work loft with recent upgrades make it move in condition”

the “2,23 sq ft” 73 Worth St #3F sold on February 3 at $1,063/ft as “sophisticated loft-living at its best!” with proper proper names and proper high-end materials throughout

the “2,150 sq ft” 60 Grand St #7 sold on February 1 at $1,095/ft as a “possibilities are endless” loft, before adjusting for “dedicated private outdoor space”

To be blunt: the recent 5th floor sale is looking like an outlier, isn’t it? But wait … there’s more....

a serious outlier, at least compared to building compIf someone just paid $1,160/ft for the opportunity to renovate, what might the space be worth post renovation? Fortunately, there is a same building, same footprint comp, as the 4th floor sold in after a “New Mint Renovation”. Of course, since that loft sold in a near-Peak market (deed dated June 30, 2008; contract was two weeks post-Peak of the overall Manhattan residential real estate market, on April 16, 2008), you’d have to adjust for different market conditions then compared to now. Unfortunately, that logical step will make your head spin, as that new minty loft sold for $2.29mm near The Peak … a 1% deficit to the recent 5th floor sale.

The 4th floor was professionally exposed to the market, coming out September 9, 2007 (in the quarter before The Peak) at $2.65mm and dropping 3 times about every six weeks to $2.4mm before finding that April 2008 contract. The 3 quick drops in the frothiest of frothy markets shows a certain motivation, consistent with that seller’s history as a buy-and-build flipper.

For that June 2008 seller bought the 4th floor loft in February 2007 in “fair” condition at $1.85mm, took only 7 months to turn it into mints, and had it back on the market (as above) at $2.695mm by September 9, 2007. Obviously, there was no intention to live there. Obviously, the big payday did not happen.

Instead of flipping the February 2007 purchase ($925/ft) plus renovation (?$200/ft minimum?) for $1,347/ft, the 4th floor flipper got (only) $1,145/ft. Put some inevitable expenses on both ends of the round trip, and that 4th floor flipper probably got creamed, even if the renovation was done at the circa 2007 The Manhattan Loft Guy Ballpark Number For A Basic Gut of $200/ft. But let’s not get (too) distracted by that flipper’s problems, and stay focused on what the prior sale says about the recent 5th floor sale.

To be blunt, again: the 4th floor sales in 2007 (as a buy-and-build) and in 2008 (with a “New Mint Renovation”) show either that these prices were ‘wrong’ or that the recent 5th floor sale is ‘wrong’. And not by a little. The 5th floor just sold in comparable condition to the 4th floor in 2007, at a 25% premium; before adjusting for condition or market conditions, the 5th floor just sold at a 1% premium to the 4th floor in new and mint condition very, very close to The Peak.

Of course, comping is hard. And there is another element to these sales that makes comping within the broad Manhattan market hard.

financing restrictions are hard to compIn theory, anything that reduces the buyer pool for a loft reduces the market value, right? And two things that reduce the buyer pool are unusual financing requirements and other unusual complications.

I hit below the regulatory status of the building, because that is fun. That status has serious practical consequences for a non-cash buyer, per one bit of prior broker-babble in the building:

Since this building does not yet have a Residential C of O, the Owners are willing to help supply part of the mortgage, although commercial loans are available.

Compared to even jumbo residential mortgages, commercial loans tend to have (a) higher rates and (b) higher down payment requirements. Unless a buyer is bringing all the required money to the table, using OPM will be unusually more expensive here. And more complicated.

Snark Alert: plans are just plans, until they happen (and caution)

August 2011: “Plans filed and work in progress to change C of O to residential”

November 2010: “plans are afoot to get the Residential C of O over the next 12-18 months”

July 2006: “currently a Commercial C of O, plans are afoot to get the Residential C of O over the next 12-18 months”

speaking of monthly carrying costsThis loft quotes $600/mo in monthly maintenance, with the explanation from that same prior bit of babble:

One of the most interesting things about this property is that the maintenance is only $600 and the street level stores produce high income currently providing each floor with a minimum of $25,000 income a year through a separate partnership which is included with this sale, and this figure will continue to go up.

If I am reading that right, the $600/mo is for coop cash flow, and the shareholders are members of a separate partnership that generates more than $2,000/mo in dividends from the retail rental income. Compared to a no-frills coop maintenance of, say, $1/ft in a ‘regular’ downtown Manhattan coop, this building is plus $3,400/mo, a very non-trivial amount (the $2,000/mo regular maintenance minus the $600/mo actual maintenance plus the $2,000/mo in partnership income).

There’s a way to think of that positive $3,400/mo in reduced carrying charges as financing $x amount of mortgage, so that the practical effect of this on an affordability scale is that the peculiar structure is as if the real comparative value of lofts in this Noho building were as much as $500,000 higher (as, roughly, the $3,400/mo savings could support roughly $500,000 in additional mortgage at some rate above 6%).

This significant wrinkle makes the comping to the rest of the market even more complicated. (In round numbers, the ‘free’ financing hidden in the positive $3,400/mo in reduced carrying charges adds $250/ft in value, so that the $1,160/ft in 5th floor purchase cost is more like $910/mo; among other impacts, bringing it more in line with -- but still not near -- 307 West Broadway at $742/ft for a buy-and-build.)

But it does not change at all the fact that the 5th floor is a significant outlier compared to the two sales of the 4th floor.

“masterful renovation” does not explainThe story line for the recent sale of the “2,564 sq ft” Manhattan loft #6R at 48 Great Jones Street seems pretty obvious from the broker babble and the price history. The loft has been “[m]asterfully renovated with no expense spared” and sold on $3.5mm on March 15, after having sold at The Peak in the overall Manhattan residential real estate market, on January 3, 2008, for (only) $2.96mm. You might wonder if the cost of the masterful renovation exceeded the gain from 2008, but you would assume that such a large gain over a Peak sale is due to the difference in condition of the loft, Then v. Now, and not to a change in market conditions. The logic is impeccable, but the real world is more complicated, because when this loft sold in 2008 it was … (wait for it) … “[m]asterfully renovated with no expense spared”.

In fact, I am going to spoil the punchline to get to the dilemma: when this loft sold in January 2008 at $2.96mm it was not only “[m]asterfully renovated with no expense spared”, it was in essentially the same condition as when it just sold for $3.5mm. (I say “essentially the same condition” out of an abundance of caution: I am reliably informed that the recent listing photos portray the same finishes and condition as when it sold in 2008; if there are any differences at all they are (a) not visible in the photos and (b) not the subject of any broker babble.)

For reasons unknown, the listing leading to that January 2008 sale is not available StreetEasy, but our data-base confirms that the loft was fully exposed to the market before selling then for $2.96mm.

fans of the efficient market theory are not amusedLet’s beat this horse one more time: without a change in condition, loft #6R gained 18% in market value from The Peak of the overall Manhattan residential real estate market until now.

I don’t love any of these theories, so I am leaning toward The Fickle Market. They are each possible, just not likely; but one is more likely than the other two (down below).

marketing sequences, and textThe recent listing history of #6R is odd, as it is not clear that the famous PruDE team that marketed the loft actually found the buyer, or whether this was a private deal that happened to hit the last ask:

May 27, 2011

new to market

$3.5mm

June 1

$3.6mm

July 18

$3.5mm

Aug 27 or 29

something happened*

Mar 15, 2012

sold

$3.5mm

(*StreetEasy says “listing sold” August 27, which sometimes really means it went into contract then, but the inter-firm data-base says the listing expired August 29, and the eventual sale is not associated with the PruDE listing.)

The campaign was successful (the loft sold at the ask, at a [ahem] ridiculous premium to the prior sale0; it may not have been remunerative for any REBNY members, however.

The (missing) campaign in 2007 from the inter-firm data-base shows the loft was long exposed to the market approaching The Peak, and that even that market insisted on a discount off the first ask, while offering a premium to the last ask:

July 27, 2007

new to market

$3.125mm

Aug 16

$2.95mm

Nov 27

contract

Jan 3, 2008

sold

$2.96mm

Indulge me for a(nother) moment, as I quote from the broker babble from the recent sale, and that of the 2008 sale (again, taken from the inter-firm data-base):

I know it is rude to offer such large block quotes, but here is a short-cut: the only difference I see is that they changed the 2008 Sony plasma television into a 2011 Samsung plasma television. The proper names are still proper and otherwise identical; the materials are the same; 2011 is nearly 2007, verbatim. Sincere flattery, indeed.

how far off the (building) charts?Compared to itself, the recent loft #6R sale is off the charts, at a premium of 18% over the last sale in the quarter with the highest recorded prices ever in the overall Manhattan residential real estate market.

But it is not so far off the charts in the building, based on the sale of the “2,500 sq ft” #4F on April 22, 2011. I will spare you a block quote, but that loft was in wonderful condition (“[d]istinguished design and an impeccable renovation”, “meticulous attention to detail and materials”). When it sold just over a year before The Peak it was a build-your-dream loft, full of potential. Starting with that sale, here is the history of loft #4F:

Dec 1, 2006

sold

$2,146,500

June 9, 2010

new to market

$3.5mm

Dec 2

$3.38mm

Feb 19, 2011

$3.5mm

April 22

sold

$3.24mm

I hit that sale when it was fresh, in my May 1, 2011, was Great Jones Street loft a million dollar renovation?, in which I wondered how much value between the sales was added by the renovation and how much by The Market. (Hint: if they spent under $400/ft, they banked some money; if not, not.)

Here we have an example of a pre-Peak sale of a needs-everything loft that resold a year ago (essentially the same overall market conditions as today) at a 50% premium (gross). That hardly seems outlandish, right?

Yet #6R just sold at an 18% premium to itself at Peak, but at a much smaller premium to #4F on a dollar per foot basis. (5.3%, with #4F at $1,296/ft, #6R at $1,365/ft.) Maybe it is a micro-nabe thing, and for reasons that I can neither see nor guess, Great Jones Street is undergoing a post-Peak boom. Maybe.

(a) a bidding war after a very long sequence of marketing, (b) the difficulties of figuring out how big a loft is if it has a mezzanine (in this case, “an upper level of perhaps 800 sq ft in a necklace of spaces in the center of the loft that weave around some full-height spaces”),
(c) the market milestones in that long history (just missing The Peak, suffering through the nuclear winter, coming back into The Thaw),
(d) a same building comp that shed some light on what Peak values were like in the building,
(e) a locution that I should probably use more often (a “do over” loft = a loft that might not be a need-to-gut, but that will likely to made over dramatically), and
(f) (finally!) another opportunity to refer to another post that is one of my personal favorites but that I have neglected re-linking to.

Indeed, I started that post:

The best single way to sum up the March 17 sale of the Manhattan loft on the2nd floor at 714 Broadway is to say that it is rich in angles. Or that it will take many hands.

The post also touches on two record-keeping issues that sometimes give me pause when I add to the Master List of Manhattan Lofts Sold Since November 2008: loft size, as mentioned above, and days on market, as this loft started in April 2008 and sold in March 2010, with three periods of being off the market of 90+ days. Fun stuff!

Feb. 7, 2012 - back story on celebrity Noho loft purchase at 10 Bleecker Street is about the sellers

numbers v. namesThe big story in this report in The Observer last week about the sale of the “2,500 sq ft” Manhattan loft #3A at 10 Bleecker Street (aka “#3F”) for the full-ask $3.25mm was the identity of the celebrity buyers but the really interesting part came at the end of the article:

Ms. [Cynthia] Nixon and Ms. [Christine] Marinoni bought the place from photographers Brian Hagiwara and Brett Baughman, who purchased the apartment in 2007 for $2 million.

I don’t know these photographers, but I very much appreciate what they did, in buying a $2mm loft just short of The Peak and reselling (after a renovation, of course) for $3.25mm. Nicely played, sirs; nicely played.

Fortunately, it was easy to find a trail on these guys and it was gratifying to see that they are serial loft renovators. Two days before buying the to-be-renovated #3B in July 2007, these guys sold the “1,200 sq ft” loft #3A next door for $1.425mm. There is only one photo from that listing still on StreetEasy, but you will find the same green painting (wall treatment?) in that 2007 #3A photo and in the main 2011 #3B photo. It is hard to see whether they renovated #3B with similar ideas and materials as the half-as-large #3B, but the broker babble in 2007 was enthusiastically echoed in that for #3A in 2011, so it is likely there is a similar sensibility in each loft.

the price proves the babbleI confess not knowing what makes the #3B floor plan “architecturally important”, but have to assume that The Actor + Wife did not buy a “Magazine Quality” 4-bedroom loft to take down walls. I also do not know how all those walls create “an ethereal, zen-like openness”, but perhaps my imagination is jaded (or I am way too cynical about babble).

There is little detail in the babble about the finishes, but there are numerous promises about quality (from “soulfully gut renovated past perfection” to “spectacular Trophy loft” and that “Magazine Quality”) and a challenge: “the photos are only the beginning.... [i]f you are looking for a Downtown Loft … that is as pristine as it is authentic, you simply must see” this loft. They got a full price contract within 6 weeks, so the lack of details did not cause a problem; at least one set of buyers agreed that the photos were only the beginning and thought the babble was fully supported in real life. (Note: the Large Photos button makes it easier to see a lovely loft; I wish there were similar photos for the #3B, but the world seems not to run to my preferences any longer.)

That’s where the story was as of this morning: regardless of who the recent buyers were, in 2007 two photographers traded a “1,200 sq ft” fully ‘done’ loft at $1.425mm for the “2,500 sq ft” full gut opportunity next door at $2mm, and then developed that large loft into a loft showcase worth $3.25mm. It was probably fun for these guys, but the money calculation requires considering what they spent on the #3B renovation; anything close to $400/ft would eat most of their profit. At $250/ft for the renovation they would have pocketed a similar amount in the buy-fix-sell process.

you will never guess where they moved nextI wondered when I noted the history of these guys where they would go next, and whether there is another loft renovation in their future. The second answer is almost certainly “no”, as I found where they went in checking the building history again today for this post.

StreetEasy has a deed record today for #3B (their old loft) that was filed yesterday, which was in contract last week when I saw the #3A sale reported. Turns out that #3B sold on the same day as #3A, January 23. Turns out that the #3A-sellers-and-3B-buyers-in-2007 reversed course by buying back their old “1,200 sq ft” loft at the same time as selling “2,500 sq ft” #3A to the celebrity couple.

It does not look as though this was their plan until recently, until October 1 to be precise. These photographers signed a contract on October 1 to buy #3A back and then put #3B on the market. Their confidence in the quality and value of #3B was rewarded with that contract within 6 weeks at full price. I have a strong suspicion that they got squeezed a bit by their 2007-buyers-turned-2012-sellers, in buying back at $1,642,225 what they had sold in July 2007 for $1.425mm, but that is life in the big city.

Those #3B 2007-buyers-turned-2012-sellers went to market on July 29, 2011, presumably indifferent as to who they would sell to, so long as they got the best price they thought was available.

for fans of New York State agency law onlyThis discussion assumes that everyone involved in these transactions acted in full knowledge and compliance with the law, but in recognition that this must have involved some fancy dancing (and lawyer review). As of July 29, the PruDE team who had represented the photographers in 2007 when they sold to the #3A 2007-buyers-turned-2012-sellers were fiduciaries for those sellers, tasked by them to sell #3A at the best price to qualified buyers. That team would have handled the negotiation with the photographers in late September, around the same time that the PruDE team was about to sign on as fiduciaries for the photographers in selling #3B.

The PruDE team could have acted as Dual Agents in the #3A negotiations, changing their relationship with the #3A sellers from their fiduciaries in order to also act on behalf of the buyers; or they could have continued to represent the #3A sellers only (with the photographers unrepresented) through the #3A contract signing. In the #3B negotiations they represented only the photographers as sellers, though I assume if they did so, they had the approval of the #3A sellers.

Fancy dancing, indeed!

back to the real storyAgency disclosures aside, Sex and the City aside (even Wit aside), the real story for my Manhattan loft jones is that two guys with great taste renovated then sold loft the “1,200 sq ft” #3A in 2007 in order to buy (then renovate) the “2,500 sq ft” loft #3B at 10 Bleecker Street; then reversed course to buy back the smaller loft on the same day they sold the larger one (to Famous People).

Jan. 3, 2012 - transformed 7 Bond Street loft sells 8% above 2007

“Words cannot fully describe the beauty ...” beats “beautifully renovated” by how much?Inquiring minds want to know the details of the work that was done to the “1,200 sq ft” Manhattan loft #4A at 7 Bond Street before it was sold 3 weeks ago at $1.55mm, because without that knowledge it is hard to assess whether any part of the $119,000 gain since it was bought 54 months earlier was due to an improved market, and how much to an improved loft.

The StreetEasy record on the prior sale is frustratingly spare, with no interior pics and no floor plan. But the PruDE archive contains photos that support the prose, which is also spare (especially excerpted!):

Those photos are the key to understanding the scale of change from that beautiful renovation to this:

absolute gem .... open floor plan that is great for entertaining, high ceilings, custom lighting, exquisite wood flooring throughout, large windows create plenty of natural sunlight in the grand living room .... Master bedroom complete with a closet of your dreams, custom kitchen with Diva induction drop in stove in large granite island with seating area. 1.5 elegant impeccable modern bathrooms

In terms of utility, the only change from 2007 to 2011 was the creation of the “Master bedroom” (no window, and kinda small, but it leads to a huge closet and en suite bath). Same number of bathrooms (1.5), with the same great bones and views.

But the photos!

I will grant that it might look better in person, as the current broker babble claims, but it looks awfully swell in these photos. Entirely redone baths and kitchen, and it looks like the kitchen moved south to fit that master bedroom and closet behind. The new floor is probably the simplest change, but what a difference it makes in the look (and feel!).

big bang, but what sized buck?The space is only “1,200 sq ft” and the difference in market value from June 6, 2007 to December 16, 2011 is that $119,000, or essentially $100/ft. Can you put down new floors at that scale, replace 1.5 baths with lovely materials, and move and replace a kitchen for less than $119,000?

On the one hand, I’d like to think so. On the other hand, I tend to doubt it, and fear that the 2007-buyers-turned-2011-sellers did not get in resale all the money they put into it. (I also fear that the bifurcated and business-like notice addresses on the deed record imply a change in status beyond a change in home, but that’s just Manhattan Loft Guy being nosy.)

I am on record as believing that the downtown loft market in Manhattan was essentially flat for 2007 and 2011 paired resales, so you should not be surprised by seeing another pair at more or less the same value. (The spreadsheet referred to in my September 27, is the Manhattan loft market back to (up to) 2007? 61 repeat sales say “probably”, “a bit”, now has 77 such pairs.) With that lovely and brand new kitchen and baths, I suspect their adjusted basis exceeds their resale price, such that the loft in 2007 condition would have sold 2% or 3% below what they paid; again, essentially flat in market terms from 2007.

The Market loved their loft in 2011: first offered for sale on August 13 at $1.65mm, they were in contract by September 21 at a round number discount to $1.55mm.

Recall that when they bought the loft it did not necessarily need a renovation; it was already “beautifully renovated” with a “fabulous” master bath and “excellent” closet space. They had to fight to get the loft then: the ask was $1.35mm in those frothy days (February 2, 2007, to be precise) and they closed on June 6 that year at $1.431mm, a 7% premium that confirms there were other bidders.

They could have done a simpler upgrade to add a bedroom for privacy, without having to move the kitchen. But I must confess a personal preference for the loft in its 2011 “absolute gem” condition over the 2007 vintage “beautifully renovated” version. I just don’t think The Market rewarded them (sufficiently) for their taste.

not buying into the combination premiumThese folks bought loft #4A in 2007 from a guy who also owned the “1,400 sq ft” #4B next door. He also offered #4B for sale on February 22, 2007 and also sold it that June after a bidding war (asking $1.75mm, #4B sold on June 13 at $1,8mm). Loft #4B was described in 2007 in exactly the same terms as #4A, with the pictures (again only on PruDE) again supporting the claim that it was a “beautifully renovated” open loft.

The prior history showed that he owned #4B since 1997 (having paid $430,000) then, but #4A only since 2002 (at $795,000). I would assume that he bought next door with the idea of eventually combining the two lofts, but he never did. Our data-base shows that he rented out that new loft (#4A) by the end of 2002 and that he rented out #4B by the end of 1997. Perhaps he never lived in either one!

I take this digression to touch again on a bit of Manhattan residential real estate conventional wisdom, one that I have riffed off of VToy of the New York Times and bantered with The Miller about: that there is a premium on potential combinations of living spaces, especially for easily combined spaces. I said in my September 10,deconstructing NY Times article about combining apartments to increase value, that I believe that the CW is generally true, but that it can be frustratingly difficult to find in the real world of closed sales.

The Miller would remind me that one data point does not make The Market, so I offer this as just one data point: The Market refused to pay a combination premium for #4A and for #4B in 2007. The owner of these two lofts in 2007 offered them for sale individually (to great effect) or as a combination, asking from February 22, 2007 the sum of the individual asking prices, $3.1mm.

In this case, at least, the seller found a better response from The Market for a loft of “1,200 sq ft” and another loft of “1,400 sq ft” rather than as a single loft of “2,600 sq ft”. Even though the lofts could not be easier to combine (they are side by side, seemingly separated by sheet rock, not brick) and the combination would solve the major floor plan drawback for each loft individually: the combo would permit true windowed bedrooms while still permitting multiple windows for the public space.

a fair test of 1+1=2.5 math, or not?The guy discovered he was better off selling the pieces seperately in 2007 than as a whole. Perhaps his mistake was in not going all in by offering them only as a combination (as hinted at by one of the agents in the New York Times piece I played with on September 10), but that is what he did. He looked for a combination premium, but did not find that The Market offered one.

Fans of VToy and The Miller will want to read that November 14 post in its entirety for details, but my (extended) key take-away (for this purpose) was this boffo close:

a strategy that showed doubt about the theory

These lofts at 30 West 15 Street might not be the ideal test case for the 1+1=2.5 theory because the sellers were not all-in on that theory. Each loft was offered as a stand-alone property, in the case of #3N for almost 4 weeks before contract, while #3S was available to a stand-alone purchaser for 9 weeks before contract. The eventual combo buyer had at least some weeks to see that the individual loft buyers had not (yet) snapped up either loft.

Separate marketing as separate lofts might have depressed the combination premium by making explicit the single-unit market values (lower, in theory). From one of VToy’s sources:

the “ideal way” to market a combination was at a single price. Listing one of the units individually “waters down” the power of the combination... and makes it harder to get as much of a premium, because buyers can see the fair market value of one unit and then “look at the two pieces and argue that they don’t add up to the number you’re asking.”

Perhaps that is what happened here, and that this form of either-or-both marketing is simply not a good test of 1+1=2.5 math. But it should be at least telling (and disappointing for 1+1=2.5 fans) that the professional agents who marketed these two lofts did not persuade the two sets of owners that they could both be as much as 20% better off if they marketed jointly only as a combination, with the theoretical premium baked in to the asking price.

If the theory works, you’d think that the sellers might try that exclusively combo marketing at first, with a back-up plan to split up into separate marketing plans if Plan A did not work. But maybe in the real world getting separate owners (and agents!) on the same page is akin to herding cats.

Those cats could not be herded at 7 Bond Street in 2007 either, even though the herding then was much easier (a single seller using the same agent). I will keep my eyes peeled in the meantime for a successful herding experience. Dedicated readers can always help, of course.

one more digression before I goSometimes I can’t help myself …. The timing may be a coincidence, or the 2007 seller of #4A and #4B at 7 Bond Street might really have occupied one (or both?) of those units. He bought this “2,196 sq ft” penthouse loft (with “1,521 sq ft” of private roof deck) at the then new development 233 East 17 Street a few days after selling on Bond Street. A very different space in a very different neighborhood, but there are very many things to like about that loft. He sold that one, too, over a year ago. His trail is cold, so this is only a short digression.

[updated Oct 2]
or somethingWhen the “3,000 sq ft” Manhattan loft on the 3rd floor at 682 Broadway sold on August 25 at $4mm, it added another data point to a line with a steep slope. The loft last sold on July 10, 2007 at $2.995mm, and before that sold on January 27, 2005 at $1.795mm. That is 3 sales in 6 years, with each of the latter two showing 7-figure gains. I guess these sales show how much fun there can be in the appreciate of appreciation.

We can all see that the loft changed between 2007 and 2011, with the old “guest apartment” being integrated into the loft, but StreetEasy lacks the former floor plan (I hate when that happens) so it is hard to see the scale of the change. But the link to the old listing on StreetEasy works, and that floor plan is here. Comparing that plan to the current floor plan, you see that the former guess apartment has been converted to a master suite, with the old bathroom now being an office, and the old bedroom being expanded into a dressing room and bath, each with a window. Structurally, the rest of the space was left pretty much as-was, with some closet reconfiguration in the bedrooms.

The loft was said to be “triple mint” in 2007 and it is difficult to ‘read’ the photos for details of how the 2011 condition (“[r]emarkably extensive renovation completed, no detail has been overlooked”) is otherwise different from 2007. Certainly, the 2011 “gorgeous custom kitchen” looks just like the pix of the 2007 kitchen.

Net-net, it is hard to say how much of the 33% gain in this 682 Broadway loft from 2007 to 2011 was due to the renovation that integrated the entire space and how much was due to other factors. That is why, when I did the data review for yesterday’s post based on 2007 - 2011 paired resales (September 27, is the Manhattan loft market back to (up to) 2007? 61 repeat sales say “probably”, “a bit”) I did not note this loft as renovated. Clearly, it has been renovated, but I just can’t tell if the renovation was limited to the 800 sq ft former guest apartment. It is reasonable to guess that this may have been (only) a $150,000 renovation if that was the case, which would hardly be the driver of a $1,000,000 gain

[Oct 2: thx to Reader Anon, in comments below, for finding thatWSJ link about the renovation. Bottom line is that it had to cost a lot more than the $150,000 I first guessed: "The construction took about a year". Among the changes evident in the WSJ pix, note the re-do of the heating system in the master bedroom (compare to the 2007 listing pixhere), and the friggin' oh-so-manly-man library (WSJ pic #5). I find it really weird that they left the kitchen largely as-was; though they put a new counter on the island and a steel backsplash on the wall, it seems to be the same 'furniture' and appliances.]

[My new net-net is that they changed a great deal of the 'skin' of the loft, without having to move much of anything other than the master bath. My new guess of a $500,000 renovation has a huge margin for error, which would leave the market gain from 2007 to 2011 as something less than 15%, again with a huge margin for error. ]

[why people hate bankstersSo those folks bought not-yet combined adjoining lofts for $2.995mm in 2007, spent a year (and many $$$) renovating it into a 3,000 sq ft 3-bedroom + manly library, and now find it too small. “After having two kids in 2½ years, we are now thinking about having a third and are needing more space.” It is hard to squeeze 4 bedrooms into that space, having made a bedroom-sized dressing room, a master-bedroom-sized library, a a perfectly child-sized home office. Could have been done easily, of course, if they had but considered the possibility that the family might grow. Sigh.]

[Best of luck in ‘burbville folks. I bet the new house looks marvelous. And cost a ton.]

Comparing the condition from January 2005 ($1.795mm) to July 2010 ($2.995mm) is even more difficult. StreetEasy has no listing for the 2005 sale, and our data-base has a limited description but no reliable photos or floor plan. The description suggests that the condition might not have changed in those 30 months, at least not enough to account for a 67% increase in value:

Granted, the market value trajectory in those 30 months was a steeply sloped line going up, but that gain is frustratingly difficult to account for. More frustrating than the 2007-to-2011 gain, if only because there is more uncertainty about the 2005 condition. And because the 2005-to-2007 gain was larger than the 2007-to-2011 gain in both percentage (much larger) and absolute terms.

I know I have said this a lot, but regular readers anticipate that I am about to say that, yes, comping is hard.

not in the middle of the street (really)I know what they mane meant to say, but the recent listing has one of the more delightful broker babble malapropisms (if that is not a contradiction in terms):

The landmark boutique cooperative building is firmly planted in the middle of tree-lined historic Great Jones Street.

love the Manhattan Loft Guy archivesI hit this loft when it was for sale in 2007, in my March 1, 2007, across the Great Jones divide / 682 & 684 Broadway throw 3s at each other. (Remember those thrilling days of yesteryear, circa early 2007: “Rumors of a more active Manhattan loft market are being borne out across Great Jones Street.”?) The “3,100 sq ft” loft across Jones Street from 682 Broadway, 684 Broadway #3E, ended up selling for the full ask back in 2007, at $3.1mm, a surprisingly low (IMO) premium over the 3rd floor at 682 Broadway, given the vast difference in monthly maintenance in these two no-frills-no-amenities coops (#3E was then $1,758/mo).

The maintenance at 682 Broadway is up to $4,270/mo from $3,640/mo, an increase of 17.3% in four years.

Here is the most impressive number about this sale: when #1104 just sold, it closed on August 15 for $3.4mm, but you need to know (in order to be impressed) that it last sold on November 19, 2008 at $3.1mm, after having been offered for sale that time from October 2007 until the contract in September 2008 (within two weeks of the Lehman bankruptcy). More about that Peak marketing campaign in a bit, but go back to these numbers:

$3,400,000

$3,100,000

August 15, 2011 beats November 19, 2008. By 9.7%. That wouldn’t sound more impressive if we called it a 10% gain.

The loft is one of the Silk penthouses, “2,210 (triplexed) sq ft” of interior, with another “579 sq ft” of terrace off of the master suite on the top-most level. Do residents really only use the (main) entrance to the loft, on the lower level which has just a bedroom, bathroom and stairs up to the living area??

It did not last long, this time: to market on May 13 at $3.575mm; in contract by June 26.

overshooting The PeakThis does not warrant a Note To Self, as I am never going to do it, but it would be interesting to collect lofts that did not sell at The Peak -- the most active residential real estate market in Manhattan, ever -- because they were over-priced. This loft has to be in that collection, with this listing history:

Oct 22, 2007

new to market

$4.1mm

Jan 31, 2008

$3.75mm

May 29

$3.25mm

Sept 3

contract

Nov 19

sold

$3.1mm

That is a million dollar discount from first asking price. But put on your retrospective spectacles (through which you see the recent close at $3.4mm) and look again closely at the January 31, 2008 asking price. Why didn’t that generate a bid, if the 2011 value was $3.4mm? The fact that the seller dropped again in May 2008 to $3.25mm indicates some flexibility, no?

The buyer pool was starting to thin after the First Quarter of 2008, but transaction volume (and pricing) did not fall of a cliff until after this loft went into contract. Perhaps the impossible-to-prove answer is that this loft was going to sell, if at all, with a contract in the last quarter of 2007 and that $4.1mm was just too rich for that market (even if something like $3.6mm might have been).

Here is another part of the Silk penthouse loft #1104 history that makes this even more confusing: that 2008 seller at $3.1mm had been a September 2003 buyer. You’d think the value of the loft from late 2003 into 2008 (four years of serious froth) would have appreciated more than … say … 15%, or even 20%. (I would.) Yet I would be wrong, as the September 10, 2003 clearing price was $2,725,000, for a run-up in those 4.5 frothy years of only 13.8%.

comping is hardThat November 2008 price for loft #1104 of only $3.1mm this looks odd from two directions: from the recent sale at $3.4mm and from the ancient sale at $2,725,000. (Note to self: look for other lofts that sold in 2011 and 2003 to see how they compare to the #1104 gain of 25%.) Apparently the recent sellers considered the $3.1mm 2008 sale as to be non-Peak, in the sense that they should not use it as an upper limit to market value in 2011. They did, after all, start a very successful campaign at $3.575mm.

If they looked at the last two public sales of residential lofts in the Silk Building, they’d have seen smaller lofts on lower floors sell at $1,156/ft in July (#821) and $1,106/ft in April (#803). They would also have seen that the last penthouse unit to sell was #1108, which is comparable in size to #1104 at “2,007 sq ft” but has many more windows (as a corner loft), a more efficient layout (IMO) and a larger terrace. Indeed, I would argue that the #1108 layout is much better than that of #1104 especially as to the integration of the terrace and a top-level media room, instead of the terrace being off the top-level master suite and sitting room in #1104.

The Market agrees with me, as #1108 sold on September 6, 2010 at the asking price of $4.695mm, a huge premium (over #1104 two weeks ago) for the windows, an extra bedroom, a more efficient layout, larger terrace, and a better inside-outside integration for entertaining. That’s a nearly 40% premium, in fact.

Net-net, the #1104 sellers and their agents interpreted the comps correctly, getting a contract within 6 weeks at a bare 5% discount from ask. Props and more props. Especially for going for the moon over the November 2008 purchase at $3.1mm. Buy low, sell high, right? Right!

May. 1, 2011 - was Great Jones Street loft a million dollar renovation?

more or less, and sold at $1,300/ftThe April 22 sale of the Manhattan loft #4F at 48 Great Jones Street at $3.24mm represents a huge premium over the year-old sale of #5R in the same building at $2,262,500, as the two lofts are roughly the same size (“2,500 sq ft” vs. “2,575 sq ft”) with similar light ( “light filled” vs. “flooded … with light”), though in very different condition. Cherry-picking the broker-babble, the high-flying #4F is

… an impeccable renovation ... with museum quality lighting ... designed with meticulous attention to detail and materials. Each area has full-height recessed doors which permit multiple levels of openness or privacy. Every room is wired for B&O sound with remote sensors. ... multi-zoned central A/C. ... The architect also gave careful thought to changing family needs and intelligently designed luxurious large open spaces that can easily be adapted by a growing family to create four separate bedrooms ….

Reading between the lines of babble, the 2-bedroom-1-bath #5R was a bit primitive, a bit of a project:

Classic and elegant loft ... Beautifully proportioned with 11 foot ceiling and traditional loft details, including exposed brick, cast iron columns and original wood floors. ... Sliding walls and curtain walls between bedrooms and living space allow for a seamless flow and pure loft openness. There are limitless configuration possibilities to create your dream three bedroom, two bath home

The Market valued the impeccable+meticulous #4F at $1,296/ft in April 2011, but the create-your-dream #5R at only $879/ft in April 2010. How much of that $417/ft difference is a change in market in a year? (Probably not much.) It seems that the #4F sellers created a million bucks in value, but did they spend a million bucks to do it?

days of froth, rememberedI hope that the #4F sellers did not spend a million bucks to create that value, because that would wipe out their gain. It happens that they bought #4F in the frothy days leading up to The Peak, closing on December 1, 2006 (about 5 quarters short of a Peak) at $2,146,500, not quite a $100k premium to the then-asking price. They bought the explicit “potential” that they turned into that impeccable renovation, as #4F was then an “original artist … loft”. By some miracle of the inter-tubes the former PruDE listing from 2006 remains on the web (sshhh!), here, showing a very primitive floor plan and set of finishes.

As suggested by the 2006 bidding war, there is some nearing-the-Peak froth in that closing price. The result of that old war and recent sale is a clear market value of the specific renovation: precisely $1,093,500. I am certain that the impeccable renovation and the “meticulous attention to detail and materials”, not to mention the “careful thought” could not have been had for my rough ballpark of $200/ft for a basic gut, especially in 2007 when trades and craftsfolk were at a premium. How much more than $200/ft (and how far from $417/ft) will determine how much ‘profit’ there was in that renovation (before considering other expense in the 2006 purchase and the 2011 sale, of course). Maybe they did not make much money on this buy-fix-and-sell, after all.

And, yes, that is a crass (and mercantile) way to look at the history of these folks and #4F. I surely hope they got much enjoyment out of the beautiful work that they did. They have lovely taste. But The Market is The Market is The Market, and I am here to comment on why and how lofts sell where they do.

viz, my brain achesI am 99.16% sure that I have never before seen broker-babble with the abbreviation “cf” before. As in:

The architect also gave careful thought to changing family needs and intelligently designed luxurious large open spaces that can easily be adapted by a growing family to create four separate bedrooms. (cf the alternate floor plan).

I used to know what all of those scholarly abbreviations meant, but I had to look this one up to confirm that this is not quite the correct usage. The Wiki reminds me that “cf” comes from the Latin, of course and “is translated, and can be read aloud, as ‘compare’.” I think the babbling broker here intends the parenthetical to refer to the alternate floor plan as an example of an adaptation to create 4 bedrooms, in which case the proper abbreviation from the scholarly Latin is “e.g.”, for example, which is commonly used in even current polite conversation (much more common than “cf”) if not often in listing descriptions.

Or was he going for “viz.”, as in "namely", "that is to say", and "as follows"? This fancy stuff is treacherous! Especially in broker-babble if you don’t get it exactly right. Oy! (not Latin ;-)

Sandy Mattingly is Manhattan Loft Guy; now with The Corcoran Group (http://corcoran.com/ ; but see the disclaimer at the bottom of the page), he can be reached most easily at Sandy@ManhattanLoftGuy.com or 917.902.2491, and followed on Twitter @ManhattnLoftGuy (note "mis-spelling").
After 7+ years, the blog has moved. Links here on RealTown will work for the foreseeable future, but new posts (and all the old content) has migrated to ManhattanLoftGuy.com.